Foreclosure Auctions: How to Buy a Foreclosed Home Part Three
Buying foreclosed real estate at auction is becoming more lucrative in recent months, but there are many things about the process that buyers should understand before they walk into the fire. It’s not quite as simple as just going into an auction and bid on a home. There is a laundry list of things that you must do in order to set yourself up for the auction process.
Finding out the when and where
The first step is obviously to find out when and where the foreclosure auctions of your interest are going to be. There are a few different ways to do this. The most traditional way is to check the newspaper each Sunday, as banks usually take out advertisements to let people know about auctions. Today’s internet age has changed the way banks operate, though. More times than not, they will advertise on the internet. One good website to check in order to find these auctions is E-Foreclosure Search
Do your homework
Before going to the auction, find out if it is going to be a bank auction or a sheriff’s auction. That is the most important nugget that you must know, because it will determine what measures you must take to buy the property. On top of that, your homework would be to secure financing for any home that you’re thinking about buying. Bank led auctions will allow people to secure financing, but this is a lot easier if you get pre-approved before heading to the auction. You might also want to do some homework on the property itself. Head up to the local city hall and take a look through the building records. Find out if there are any violations against the property. Lots of buyers like to pay for an appraisal of the property to give them a ball park figure, which is a very good idea as well.
Paying for the property
This is where the background knowledge on the type of auction will come in very handy. If it is a Sheriff’s auction, then you will be required to pay nearly all of the purchase price right away. At these auctions, the only accepted form of payment is certified check or cash. At a bank auction, you will have the chance to secure financing, but it helps speed up the process if you get pre-approved for any potential loan. Getting an appraisal will help you do this beforehand.
The down payment
As mentioned previously, you will be asked to pay either the entire amount of the home or close to that if you purchase at a sheriff’s auction. That is not negotiable, so if you aren’t ready to do it, then you shouldn’t bother bidding. In bank led auction, the going rate is between 10-20%, depending upon which bank and what sort of property you are bidding on. Most of the major banks require that you get pre-approved with some sort of credit check before you can participate in the auction. If you don’t have excellent credit, then there is a good chance that you are going to get shut down in today’s tight housing market.
If you want to more insight on the foreclosure process, check out Seth Suthel’s foreclosure article in the Orlando Sentinel. It sheds some more light on the process and what you can do to prepare yourself.